Small airlines to get a boost from more FDI in aviation

MUMBAI: Regional connectivity is likely to get a boost after the government's nod to foreign airlines to invest in non-scheduled airlines, or carriers that operate without a fixed schedule.

Experts said the decision could open up opportunities for about a dozen small regional players that have sprung up in the domestic aviation sector, even as the bigger airlines have been ailing. Such airlines can harness the seasonality of air traffic to their advantage and do without deploying a dedicated aircraft, they said.

"It will give an airline the flexibility to come in as an operator where it can press aircraft into service when the seasonal traffic for a Dubai shopping festival or any such event is there for the taking," said Amber Dubey, a partner at KPMG. "It might open in a good way a window for foreign airlines to test waters before they commit to making big investments in India."

The regional airlines that have either started operations or are waiting in the wings include GR Gopinath's Deccan Shuttle, which will offer connectivity within Gujarat, a state that has a well-laid-out regional airport network and Air Mantra, which are owned by corporate groups.

Gopinath said the government's move would spur new entrepreneurs as there will be more investment in the sector, which has hitherto been dominated by just a few players who have been manipulating fares. "More airlines can be started by new players as the restrictive policy goes away. There will be lot of scope to identify new cities that can be connected," Gopinath told ET.